Survival Of The Not-So-Neo Banks?


Oct 24, 2022


Cindy Grazer


Oct 24, 2022


Cindy Grazer


Brazilian digital bank Nubank announced this week that it will launch its own cryptocurrency next year. The so-called “Nucoin” is part of a strategy to reward customer loyalty and increase engagement with products in the Nubank financial ecosystem. This announcement highlights yet another publicly traded (in this case, digital-first) financial institution moving towards digital assets. Interestingly, N26 also announced this week that it will launch crypto trading, allowing its users to buy and sell 100 tokens.

It isn’t exactly a new idea, as CashApp, among others, have supported transacting in BTC for some time now. But the announcement by N26 also sheds light on neobanks becoming increasingly more creative in the quantity and diversity of product offerings.

Just this week, Revolut launched a holiday home rental service, seemingly taking on Airbnb. This will enable over 20 million customers globally to book hundreds of thousands of holiday homes. Going one step further, they will also grant cashback to users who book through the app. While the opportunity to cross sell to clients within an existing ecosystem is attractive from a business standpoint, the jury is still out whether using a banking app to book a holiday home might be a stretch for users.

Organizational changes seem to be permeating traditional banks as well. New, “fintech-like” features continued to be rolled out, such as JPMorgan’s earned wage access and Lloyd’s spending accounts for kids. On one hand, banks are benefitting from the macro environment via increased yield on deposits. On the other hand, they face growing pressure to compete with the versatile product offerings of the challenger banks - with varying degrees of success (evidenced by Goldman Sachs’ decision to fold Marcus into their wealth management business).

In a world of tough competition between neobanks and incumbents, the question of who will last longer still remains.

Newsletter Image 10-24-2022

Portfolio News

Flutterwave appoints Marshall Lux, Former Chief Risk Officer at JPMorgan Chase, as Senior Advisor - Marshall brings 30 years of experience from BCG, JP Morgan Chase and Mckinsey, with extensive experience in model building, stress testing, portfolio management and optimization, line setting and increases, fraud, regulation, cyber, and operations risk. Read more

Survival of the Not-so-neo Banks?

JPMorgan Chase gives some customers early payday deposits - The feature — which accelerates payments including payroll, tax refunds, pensions and government benefits by up to two days — debuts for Secure Banking customers starting this week. Read more

Mobile bank N26 launches cryptocurrency trading with Bitpanda partnership - N26 customers with a verified identity can access N26 Crypto from the “Trading” section within their N26 app’s new “Finances” tab. Thus, they can buy crypto from their fiat bank account. The transaction fee is set at 1.5% for BTC and 2.5% for other currencies for the usual accounts with some extra discounts for N26 metallic card holders. Read more

Goldman Sachs folds Marcus into wealth management unit - Launched in 2016, Marcus has so far managed to attract 13 million customers, with deposits of more than $100 billion. However, the bank is now set to refocus on its traditional strengths, reorganized into three division: the asset and wealth management unit, a trading and investment banking business, and a platform solutions division housing retail operations such as the Apple credit card and transaction banking. Read more

Lloyds Bank launches combined spending and savings account for kids - The spending account works just like a current account, with a contactless Visa debit card to use in shops, online and at cash machines. The saving account gives instant access savings, helping kids to get into the habit of saving regularly towards long term goals. Read more

Banks are discovering that holding cash can be lucrative again - Wall Street giants and scrappy start-ups alike this week have reported substantial jumps in net interest for the quarter that ended on September 30. Slow moving custodian Bank of New York Mellon was among the biggest winners, with a 44 per cent increase year on year. Now that holding cash can be lucrative again, of course more financial institutions want it. But competition is rising. Read more

Industry News

Mastercard launches 'Crypto Source' For financial institutions - MasterCard has announced the launch of 'Crypto Source,' a new program that aims to assist financial institutions in offering their clients crypto services. The new Mastercard program was made in collaboration with Paxos, a crypto-focused trading platform that is currently backed by PayPal. For the partnership, Paxos will offer asset management and trading services, while MasterCard will primarily concentrate on security tools and regulatory compliance. Read more

The stubborn persistence of paper in a digital world - The FT Magazine dives into US tax preparation and filing and chats to H&R Block about the stubborn persistence of paper in what could/should be much easier task performed digitally. The CEO thinks the reason behind this is that humans still like doing business face to face. Read more

Amazon launches UK portal for buying insurance - Amazon is launching a portal for buying insurance in the UK, challenging established price comparison sites in the latest indication of Big Tech’s growing ambitions in financial services. Read more

JPMorgan Adds Crypto Policy Head After Dimon ‘Ponzi Scheme’ Quip - JPMorgan Chase has hired a new head of digital assets regulatory policy, less than a month after CEO Jamie Dimon told lawmakers that cryptocurrencies are “decentralized Ponzi schemes.” Read more

Real-Estate Agents Turn to TikTok and Instagram Reels to Market Properties—and Themselves - The creator economy has come to real-estate! One realtor, now dubbed “The Snapping Realtor,” by primarily using Instagram and its Reels feature to highlight new listings has boosted his earnings in five years from $50,000 a year in real estate (and still waiting tables) to at least $500,000 annually, though this year he expects that to be closer to $700,000. Read more

The ‘Merge’ did not fix Ethereum - This opinion piece in the FT argues that the switch in the way the Ethereum blockchain works, while improving its green credentials, is leading to increased centralization of the network and potentially how regulators view it. Read more

The work dynamic between IT and cyber leaders is changing as digital fortification becomes more urgent - In a year of high-profile cyberattacks, chief information officers say cybersecurity has sprinted up their agenda and got them working more closely than ever with chief information security officers. Read more

White House issues ‘Blueprint for an AI Bill of Rights’ - Guidelines are aimed at safeguarding personal data from misuse in artificial-intelligence algorithms that drive hiring, lending and other business decisions. The guidelines do not include enforcement measures, and also fall short of the European Union’s landmark privacy regulation. Read more

Visa partners with FTX in a bet that shoppers still want to spend cryptocurrencies in a bear market - Visa and FTX are offering debit cards in 40 countries with a focus on Latin America, Asia and Europe. The cards, which are already available in the U.S., will link directly to a user’s FTX cryptocurrency investing account. The move allows customers to spend digital currencies without moving those off an exchange. Read more

Facebook parent Meta ordered to sell Giphy after losing fight in U.K. - Meta, then known as Facebook, bought Giphy in May 2020 for $315 million. The U.K.’s Competition and Markets Authority initially ordered Meta to sell Giphy last year. Meta said this week that they are disappointed by the order, but won’t appeal the decision further. Read more

Visa, Mastercard Draw New Government Scrutiny Over Debit-Card Routing - The Federal Trade Commission is investigating whether Visa and Mastercard security tokens restrict debit-card routing competition on online payments, according to people familiar with the matter. The FTC for the past few years has already been probing whether Visa and Mastercard block merchants from routing payments over other debit-card networks. The networks acknowledged an FTC probe in regulatory filings in recent years. Read more

Select Financings

AAdonis - New York based medical billing startup raised $5.6m in Seed funding led by Bling Capital. Read more

Bags - New York based loan marketplace focused on underrepresented businesses raised $3m in Seed funding led by Slauson & Co. Read more

Banyan - New York based network for SKU data raised $43m in Series A funding led by Fin Capital and M13. Read more

Bookkeep - New York based accounting automation platform raised $6.6 million in Seed funding led by Fin Capital. Read more

Bumpa - Lagos based retail automation platform raised $4 million in Seed funding led by Base10 Partners. Read more

Chainsafe - Toronto based blockchain infrastructure startup raised $18.75m in Series A funding led by Round13. Read more

Credit Key - LA based B2B BNPL company raised $15m in Series B funding led by Greycroft. Read more

Kudos - US based credit card browser extension raised $7m in Seed funding led by Patron. Read more

Landis - New York based real estate tech startup raised $40m in Series B funding led by GV. Read more

LuckyTruck - Ohio based trucking insurance provider raised $2.4m in Seed funding led by Candid Insurance Investors. Read more

MaxAB - Egypt based B2B food and grocery delivery startup with a bill aggregation product raised $40m in Series B funding led by ADQ, British International Investment and Silver Lake. Read more

Maplerad - Africa based embedded payments and card company raised $6m in Seed funding led by Valar Ventures. Read more

Mercantile - New York based provider of industry-specific credit cards raised $15m in Series A funding led by Index Ventures. Read more

Ordo - U.K. based open banking startup raised £10m in Series A funding led by Equinox Systems. Read more

Ottr - SF based Solana DeFi wallet that aims to make it easier for the average Joe to buy and transfer crypto raised $3.1m in funding led by Race Capital. Read more

Trendsi - California based startup that connects e-commerce sellers with suppliers raised $25m in Series A funding led by Lightspeed Venture Partners. Read more


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